NSW Hospitality Minister George Souris earlier this month demanded that the NSW Office of Liquor, Gaming and Racing (OLGR) take immediate action to investigate and close a loophole that allowed services like The Beer Baron and The Blind Pig to operate on an unlicensed basis as long as they treat sales as "gifts" accompanied by food or flowers.

The services use Facebook, websites and word of mouth to market their wares. However, it is illegal to sell takeaway alcohol after midnight, including deliveries.

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The OLGR says operators of the Blind Pig, Beer Baron and other similar services were being interviewed and ordered to produce records, including records of orders and credit card sales, alcohol purchases from retailers and delivery arrangements.

This would enable liquor licensing authorities to determine whether the sales really were "gifts" as claimed. OLGR said people buying from the beer barons would be "urged to co-operate with the investigation" and submit to interviews but stressed that there was no suggestion buyers were committing any offences.

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NSW Police is involved in the investigation and a police spokesman said in a statement that the beer barons would have no choice but to hand over their records. Police have "notice to produce" documents powers under the Casino, Liquor and Gambling Control Authority Act.

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But NSW Police said that while it encouraged buyers to also assist the investigation, police had no power to compel buyers of alcohol to participate in interviews.

"The investigation is examining how these operators comply with various requirements under Liquor Act exemption provisions in particular that purchases must be gifts and accompanied by food or flowers," the OLGR said.

"It will also assess advertising to determine compliance with the Liquor Act and responsible liquor promotion requirements. If evidence warrants, prosecution action will be taken against any operator breaching the liquor laws."

At least one of the services had been given express permission by the OLGR to operate without a license and Beer Baron owner Jed Clarke was so confident he was protected that he contacted this website to gloat about the loophole.

Clarke did not respond to a request for comment on the OLGR and NSW Police investigation.

But both Clarke and competitor The Blind Pig have had to put on new delivery staff to meet the surge in demand for after-hours grog. The highest demand has been after takeaway alcohol stores close at midnight.

At the end of the Queen's birthday long weekend, The Blind Pig posted this to its Facebook wall: "6.15am and the end of an Epic weekend. Turns out the Queen is good for something after all. A few delays due to the huge amount of calls but more staff will be jumping on board soon. Cheers guys!"

Some, including prominent barrister Charles Waterstreet, have come out in support of the beer barons, saying he would have loved to have used the service in his younger days

"There are plenty of benefits for all of us in this service. It stops drunk people driving to the bottle-oh and stops fights at clubs with bouncers at 3am. And drinking at home is safest," Waterstreet wrote in a recent column.